But if the rumored date and place of Apple's gathering—Sept. 10 in San Francisco—is correct, it might coincide with an equally interesting development that could occur that day right down the street, at the Moscone West convention center. That's where
IntelINTC 0.13836042891732964%Intel Corp.U.S.: NasdaqUSD28.95
0.040.13836042891732964%
/Date(1438376400109-0500)/
Volume (Delayed 15m)
:
26641760AFTER HOURSUSD28.91
-0.04-0.1381692573402418%
Volume (Delayed 15m)
:
517003
P/E Ratio
12.266949152542374Market Cap
137657253627.777
Dividend Yield
3.316062176165803% Rev. per Employee
517816More quote details and news »INTCinYour ValueYour ChangeShort position
will hold its annual conference for developers, called IDF.

Intel (ticker: INTC) may disclose an accelerated schedule for production of its new 14-nanometer generation of Atom chips for smartphones and tablet computers, and that could turn up the heat on its competitors.

IN PART, INTEL TRAILS IN THE mobile-chip race because it has treated tablets and smartphones as second-class citizens, providing their makers with only its Atom line of microprocessors. Historically, these haven't been as technologically sophisticated, fast, or powerful as the microprocessors Intel makes for personal computers and servers.

Making chips smaller can enormously boost their efficiency, measured by how much work they can do per watt of power expended.

For a year or more, Intel has been shipping PC and server chips, dubbed "Core," with transistors that measure 22 nanometers, or billionths of a meter. But the first 22-nanometer Atom chips are only now reaching production. Devices using them aren't expected to reach stores before the holidays, says microprocessor analyst Tom Halfhill of the Linley Group. That would put Atom about a year behind the Core family of chips in adopting 22-nanometer technology.

The next step for Intel is to introduce its still-faster 14-nanometer designs, which are expected to enter production in its Core line of chips by about 2014's second quarter. According to a person close to Intel, the company is likely to announce a schedule at IDF that would significantly trim the inevitable one-year lag for boosting the Atom chip to the next level in speed. And in fact, Atoms will go into 14-nanometer production just six months after the Core chips.

ARM-based chips have had an advantage in power efficiency, one of the main reasons they're favored for use in phones and tablets, where battery life is partially determined by the efficiency of the microprocessor. Intel has been closing the gap, but not fast enough.

The 22-nanometer Atom chips probably are about at parity with ARM-based chips in delivering the same performance at comparable power levels, says Halfhill.

But parity isn't good enough. To win over customers, Intel must demonstrate an advantage in performance per watt of power. "There's not enough of an incentive for OEMs [original-equipment manufacturers] to move to x86 if they're merely getting comparable performance and energy savings," Halfhill observes, referring to Intel's x86 chip architecture, which has dominated the personal-computer world for decades.

When Intel moves Atom to the 14-nanometer size, adds the analyst, the chips finally might boast a power advantage over ARM's. That eventually could help turn Intel from laggard to leader in mobile devices.The announcement at IDF might even come with disclosure of specific dates, albeit not hard-and-fast ones, on which production of the 14-nanometer Core and Atom chips will begin, making the stepped-up schedule more credible.

THE QUESTION THAT WALL STREET will ask in the wake of such a development is what the payoff would be for Intel. At the least, it could help investors' sentiment on the chip maker's stock. At a recent $21.91, the shares fetch a below-market multiple of 11 times next year's expected earnings because Intel is seen as tied to the withering PC market, with no new opportunities. They yield 4.1%

The chip giant has made billions selling microprocessors costing hundreds to thousands of dollars. As I've noted before in this space, chips sold by Nvidia and other manufacturers for phones and tablets are far less expensive, below $100 to start with and, in reality, as low as $10 or $20, though pricing varies tremendously as companies vie to be in each hot new tablet or phone.

Selling Atom chips with the latest technology would mark a major change for Intel, which has tended to allocate its top manufacturing resources to its most expensive products, to generate the biggest upfront payoff.

With Intel's trailing position in tablets and smartphones, Atom chips, in low volume and with low prices, wouldn't offer much revenue or profit initially to the company.

But even if the revenue contribution is very small at first, relative to that generated by PC, server, and networking chips, says Halfhill, Atom could give Intel a strategic, long-term boost. "This is rather like in chess," he suggests, "setting up the board before trying to take the king."

Not only would Intel gain some sales to producers of tablets and smartphones, it would establish its x86 chip architecture as a viable alternative to ARM's designs. And it would show that x86 can remain at the cutting edge of chip technology for many more years.

INTEL HAS LONG ARGUED THAT the PC market, which has declined sharply this year, is reinventing itself. New models that combine the best of tablets and laptops are supposed to eventually give it a boost.

Newly appointed Intel CEO Brian Krzanich last month said that both Core and Atom chips are being designed into more than 50 models of such 2-in-1, or hybrid, tab-laptops this year. But the argument is wearing thin. Hybrids have shown little traction. It's possible that next year's revamped Atom chips will improve sales, but it's also possible that hybrids are just duds.

In that case, to thrive Intel absolutely must gain ground in tablets and smartphones.

An accelerated schedule for Atom doesn't guarantee that tablet and phone makers will purchase the Intel chips. After all, they've been buying from the ARM camp for years, and there's an argument for sticking with what works.

But the news from IDF next month could be the best development for Intel's outlook in years.